Rezco donates to Obama while the heat is off for tenants

Tim Novak:

For more than five weeks during the brutal winter of 1997, tenants shivered without heat in a government-subsidized apartment building on Chicago's South Side.

It was just four years after the landlords -- Antoin "Tony'' Rezko and his partner Daniel Mahru -- had rehabbed the 31-unit building in Englewood with a loan from Chicago taxpayers.

Rezko and Mahru couldn't find money to get the heat back on.

But their company, Rezmar Corp., did come up with $1,000 to give to the political campaign fund of Barack Obama, the newly elected state senator whose district included the unheated building.

Obama has been friends with Rezko for 17 years. Rezko has been a political patron to Obama and many others, helping to raise millions of dollars for them through his own contributions and by hosting fund-raisers in his home.

Obama, who has worked as a lawyer and a legislator to improve living conditions for the poor, took campaign donations from Rezko even as Rezko's low-income housing empire was collapsing, leaving many African-American families in buildings riddled with problems -- including squalid living conditions, vacant apartments, lack of heat, squatters and drug dealers.

The building in Englewood was one of 30 Rezmar rehabbed in a series of troubled deals largely financed by taxpayers. Every project ran into financial difficulty. More than half went into foreclosure, a Chicago Sun-Times investigation has found.

"Their buildings were falling apart,'' said a former city official. "They just didn't pay attention to the condition of these buildings.''

Eleven of Rezko's buildings were in Obama's state Senate district.

...

Much of the criticism has centered on two real estate deals involving Obama's South Side mansion. In the first, Obama paid $300,000 less than the asking price for a doctor's home, while Rezko's wife paid the doctor full price for the vacant lot next door. Then -- a few months before Rezko was indicted -- Obama bought part of that lot from Rezko's wife.

But Obama's ties with Rezko go beyond those two real estate sales and the political support, the Sun-Times found. Obama was an attorney with a small Chicago law firm -- Davis Miner Barnhill & Galland -- that helped Rezmar get more than $43 million in government funding to rehab 15 of their 30 apartment buildings for the poor.

Just what legal work -- and how much -- Obama did on those deals is unknown. His campaign staff acknowledges he worked on some of them. But the Rezmar-related work amounted to just five hours over the six years it said Obama was affiliated with the law firm, the staff said in an e-mail in February.

Obama, however, was associated with the firm for more than nine years, his staff acknowledged Sunday in an e-mail response to questions submitted March 14 by the Sun-Times. They didn't say what deals he worked on -- or how much work he did.

"The senator, relatively inexperienced in this kind of work, was assigned to tasks appropriate for a junior lawyer,'' according to an e-mail from Obama spokesman Robert Gibbs. "These tasks would have included reviewing documents, collecting corporate organizational documents, and drafting corporate resolutions.''

In fact, Gibbs wrote, "Senator Obama does not remember having conversations with Tony Rezko about properties that he owned or any specific issues related to those properties.''

Rezko and Mahru had no construction experience when they created Rezmar in 1989 to rehabilitate apartments for the poor under the Daley administration. Between 1989 and 1998, Rezmar made deals to rehab 30 buildings, a total of 1,025 apartments. The last 15 buildings involved Davis Miner Barnhill & Galland during Obama's time with the firm.

Rezko and Mahru also managed the buildings, which were supposed to provide homes for poor people for 30 years. Every one of the projects ran into trouble....

...

There is much more.

Junior lawyers working on real estate deals usually have to do due diligence or provide information to others who are doing due diligence on the financing of the deals. With the developers lack of experience and their shoddy operation it is unlikely that they could have gotten traditional financing.

But, even government financing requires some responsibility to make sure the borrowers has the resources to repay and the expertise to complete the project. The serial failures of the Rezko projects suggest that no one was looking out for the lenders or the future tenants. Whoever did the work should be answering questions about what went wrong. There appears to be an absence of attention to details in these projects.

I think Novak will have more on this investigation. I think this should be a major story.